Spotlight on Australia - April 2025

Gauging the fallout from Trump’s tariffs will take months if not years but for US beef exporters, the impact has been immediate. China is delaying the renewal of export licenses for US abattoirs. Australian beef exporters have experienced similar drama in recent years and now it is their turn to capitalise. However, in the end, there will likely be no winners.  

China’s growing beef market

China is the second-largest beef market in the world after the US but with smaller herds, it is the largest import market.

Chinese consumers eat much more pork and poultry than beef but as incomes have risen so has their share of beef. Until recently, local herds have not kept up and so Chinese consumers have developed the taste for foreign beef!

In 1990, Chinese consumers consumed 0.88 kg of beef per capita, which was 2.5% of total meat consumption. By 2022, they were eating 8 kg of beef per capita, which is 7.1% of total meat consumption.

Several local swine and bird flu outbreaks over the last 20 years, have also contributed to beef’s  rising popularity. Beef was even seen as helping build resistance against COVID-19. 

However, Chinese consumers still trail their neighbours Japan and South Korea in beef

consumption (see chart below), which suggests that beef still has room for further growth.

Australian beef exports to China

Australia dominated Chinese beef imports throughout the early 2010s with US imports banned between 2003 and 2017 because of fears over mad cow disease (BSE). Brazil also suffered bans for mad cow disease and for the use of feed additives, but those bans were much shorter than the US ban.

The re-emergence of imports from the US, particularly since the 2020 Phase One trade agreement with China, and the rapid growth of Brazilian imports have since relegated Australia to fighting for third place (see chart below).

However, Australia maintains its lead in the more lucrative but smaller fresh and chilled beef segment -  think Wagyu vs hamburgers.  

China’s recent ban on Australian beef

Australian beef exports to China were dragged into a political dispute between Australia and China sparked by Australia’s push for an independent inquiry into the outbreak of COVID-19.

Between 2020 and 2024, China denied import licenses for up to 10 major Australian abattoirs. One of the abattoirs was in the electorate of the then agriculture minister. This drove a 33% fall in Chinese imports of Australian beef between 2019 and 2021 while Chinese imports of Brazilian and US beef increased by 121% and 1,469% respectively. The Australian bushfires of summer 2019-2020 did have some impact on beef exports but impacted dairy much more. The bushfire impact was offset by good conditions for livestock growth in the preceding year.

China’s ban on US beef

US President Donald J. Trump imposed sizable tariffs on selected Chinese goods in his first term, with President Joe Biden adding to them during his presidency.

However, in his second term, Trump has fully embraced his inner William McKinley and has introduced a series of tariffs on most countries but especially on China. Total US tariffs on China sits at 145% for most goods (as of mid-April).

As game theory suggests, China responded with tit-for-tat tariffs of their own. More critically, they have also targeted key US industries (and constituencies) with non-tariff barriers. This includes the US beef industry.

So far this year, China has been renewing expiring 5-year import licenses for US pork and poultry but not for US beef. Around 300 US abattoirs are currently affected, which will impact most of US beef exports to China. Australia’s recent experience suggests that the license renewals will take years and will be strategically staggered, but this assumes that the US and China start negotiating soon.

Australia filling the gap

Recent evidence suggests that Australia is filling the emerging gap left by US beef exports to China (see chart below). Australia is also benefiting from some Chinese bans on abattoirs in Argentina, Brazil, and Uruguay in December 2024.

Oversupply and global recession

While the Australian beef industry can revel in its new opportunities, there are two worrying trends.

A combination of increasing Chinese herd size and beef imports is leading to oversupply and driving down beef prices in China (see chart below). Around two-thirds of Chinese farmers are making losses. Some commentators speculate that the December 2024 bans of South American abattoirs was a Chinese response to oversupply. The Chinese Ministry of Commerce is currently investigating beef imports. The oversupply may be fixed by the projected drop in US exports to China but Australia may also once again find its beef exports restricted.

Of course, the elephant in the room is the negative impact the US-China trade war will have on the Chinese economy and already struggling Chinese consumers.

Chinese consumers still see imported beef as a luxury item and thus a recession will see demand for all imported beef drop.

Final thoughts

The Australian beef industry may have received a little boon with the onset of the trade-war, and so soon after resolving its own trade dispute with China. Unfortunately, it may soon be of little consolation, as Chinese beef demand shrinks in worsening economic conditions and the Chinese government reacts to increasing oversupply of beef imports. Longer term, Chinese beef imports should increase as Chinese consumers continue to increase their beef consumption as their wealth increases to match that of their neighbours.